Navigating the Limitations of ESG Data Quality in Real Estate Investment

Sammanfattning

Environmental, Social and Governance (ESG) data have become a central input in the decision-making of institutional investors in real estate, yet their quality and reliability have recently beenquestioned by a growing body of academic research. Ratings produced by different providers for thesame firm often diverge; disclosures remain incomplete and sector-specific methodologies continue toevolve. Despite this, little is known about how real estate institutional investors actually cope with theselimitations in their day-to-day decision-making. This study addresses this gap by examining how thelimitations of current ESG data quality shape the decision-making of institutional investors operatingin European real estate markets. Drawing on an interpretivist and constructivist philosophy and on anabductive approach, the research takes the form of a qualitative multiple-case study based on semi-structured interviews with 9 senior practitioners. The interview material is analysed thematicallyfollowing the framework of Braun and Clarke (2006) and interpreted through the lens of InformationProcessing Theory. By connecting the literature on ESG rating divergence with the literature onsustainable real estate investment, this thesis contributes to a better understanding of how institutionalinvestors process ambiguous ESG information under conditions of uncertainty and equivocality